Buying and selling mobile app businesses is a relatively new concept compared to buying and selling other digital assets, such as websites and domain names. Since 2014, U.S. mobile users are consuming more of their digital media on their phones. Mobile apps eat up more of our time than desktop usage or mobile web surfing, accounting for 52% of the time spent; however, mobile ad spend still lags behind mobile media consumption. There is a tremendous growth opportunity for the mobile app industry, which in turn indicates a great opportunity for mobile app investors and entrepreneurs.
If you are a website investor, you are already familiar with different aspects of a web business. Most of your knowledge about web businesses can be easily translated into app businesses.
Website Traffic vs. Mobile App Usage
For most types of web businesses, traffic is always the most important aspect to look at when measuring the performance of a website. The quantity and quality of traffic can directly impact the bottom line of a web business.
Most websites have Google Analytics installed so that traffic can be easily monitored. Data such as Page Views, Sessions and Unique Visits can give you a pretty good idea of how well the website business is performing. Similarly, any apps listed in Apple’s App Store will receive usage tracking data from Apple. You can always verify an iOS app’s data by asking for the access to App Store Analytics from the app seller. There are also many other great app analytics tools out there such as Flurry, App Annie, Sensor Tower that provide more in-depth app usage insights. Most analytics platforms allow their users to share analytics data with others. Using Apple’s App Store analytics as an example, types of data sets such as Downloads, User Sessions and Active Devices give you pretty intuitive numbers that can measure the “traffic” an app gets. Average Session Durations and Retention Rate are also very good indicators of the app user’s engagement. Retention Rate tells you how many people are still using this app after a particular amount of time. We usually look at Day 1, Day 7 and Day 30 retention rates. In regards to Android apps, research shows an average 30-day retention rate of 9.55%.
SEO vs. ASO (App Store Optimization)
Most apps get downloads through organic searching of the app store, social media, press release and paid ads. According to Forrester Research, 63% of apps are discovered via app store search. That’s why App Store Optimization (ASO) for apps is as important as SEO for websites.
Different from SEO, ASO is not all about keyword rankings. Once someone finds your app through a keyword search, you also need to make it visually appealing, so they download it. This means having compelling screenshots, a beautiful app icon and other elements that will help convince a person to choose your app over your competitors.
There are some good free ASO tools out there that could help you understand an app’s keyword rankings. App Annie gives you top keywords an app is ranked for in the U.S. store. Sensor Tower’s keyword research tools give you much more in-depth information on an app’s suggested keywords, each keyword’s search volume and difficulties to rank for those keywords.
Mobile Action gives you many more recommended actions on how to improve an app’s visibility in the app store, and it helps you track that app’s visibility score over time. Many apps with good usage data but low downloads have a lot of room for growth with proper ASO effort.
Example of SensorTower’s Keyword Suggestions
Example of Mobile Action’s ASO Recommended Actions
Website Business Models vs. App Business Models
Most websites are monetized with one the following business models: Content/Advertising, Ecommerce, SaaS (software-as-a-service), Digital Product/Service.
Most indie developers’ apps are monetized with advertising, in-app purchase/subscriptions and app download sales. That revenue could easily be verified through App Store/Google Play Store Sales Reports and ad network income reports.
Google AdMob, Apple iAd and RevMob are some of the most popular mobile ad networks. Doing proper ad placement optimization can help increase mobile apps’ ad revenue. In-app purchases allow customers to download the apps for free and pay only for optional premium functions. More and more indie developers start to offer their apps for free for user acquisition purpose and monetize with in-app purchases.
In terms of costs and time required for running a website business, content websites usually require generating new content and doing SEO on a regular basis. Ecommerce sites deal with customer support and sometimes inventory and order fulfilment.
A mobile app business is similar to a SaaS web business. Once the app is up and running in the app store, there isn’t much work you need to do to maintain the app itself. However, sometimes you might want to update your app to fix bugs, to add new features and to adapt to new iOS versions. You can always outsource this work to freelancers for a low rate.
Buying and selling apps is a very new business. Apple just allowed developers to sell their apps in 2013. In general, the mobile app industry has a growing revenue trend compared to websites. The good news is, as a website investor, you can already apply some of your existing knowledge about websites to apps.
Given the emerging resources available, it is more than achievable for one to learn to identify apps with growth potential and to effectively increase their revenue. ASO, mobile ad placement optimization, developing new in-app purchase features, and user acquisition through your existing website resources are all good ways to run and nurture your app business.
As with any investment, there are risks – but there are certainly more rewards to be had with being an app investor.
If you have questions about buying and selling mobile apps or you have insights about growing app businesses that you want to share with me, please drop an email at [email protected].
Effectively monetizing a website might be hard work, but despite the struggle, it is possible. Of course, the first step is understanding which monetization methods are available, and which methods best align with your individual objectives. On that note, I’ve prepared this article by analyzing and summarizing six website monetization methods and the circumstances under which each method is useful. Lastly, along with each method, I’ve also included an example of a real site listed on Flippa using that method. So enjoy this article, and start monetizing your website today!
English-Test.net uses an AdSense based monetization method.
Monetization via Google AdSense: English-Test.net
English-Test.net is the self-proclaimed largest collection of interactive online English tests in the world. The site boasts over 1.1 million Unique Visitors a month and about 2.7 million Page Views a month. This massive amount of traffic is being monetized with Google AdSense to the tune of about $5,000/month in revenue.
RewriteMyPaper.com uses a SaaS monetization method.
Compared to the traditional model of software distribution, in which software is purchased for and installed on personal computers, the Software as a Service (SaaS) model delivers the software service by making it available to the users over the Internet. SaaS is becoming an increasingly prevalent delivery model because of its many benefits such as easy accessibility, painless upgrade, lower initial costs, etc. Some SaaS businesses charge their users on a subscription base, such as Spotify and Evernote, while other SaaS businesses charge their users based on the usage, such as RewriteMyPaper.com and Heroku.com. If your website provides a valuable software service and your users are willing to pay for using it, SaaS would be a good option for you to maximize your revenue from the value of the service.
RewriteMyPaper.com provides a software service that helps college students rewrite their papers and essays. Students simply copy and paste the papers to the website and it automatically rewrites the papers for them. Users are charged for credits that they use based on the number of words in the papers they would like to have rewritten. With 1.5k Unique Visitors and 15.4k Page Views per month, the website generates an average monthly revenue of $725 during the past 6 months.
TheRockingChairCompany.com uses a dropship eCommerce monetization method.
Since businesses being monetized via dropship ecommerce do not carry inventory, they usually take less time to operate and require less cash to start up, compared to an eCommerce business that has to manage the inventory and shipment in-house. It is an attractive business model from an operations standpoint. However, the profit margin of a given dropship eCommerce business would generally be much lower compared to a similar inventory-holding eCommere business. There is also an underlying risk since the dropship business has little control over their inventory and shipment. In general when you go the dropship route, there are likely to be many other stores that carry the exact same products. You really need to differentiate your business from the many other competitors in order to win more orders. The dropship business model is a good option for you to bring in extra income, as it is relatively easy to start and operate.
TheRockingChairCompany.com (TRCC) is a dropship eCommerce website selling chairs and tables. The website is 9 years old with 5.4k unique visits and 25.3k page views per month. It generates $12k products sales and $2.7k gross profits per month with a profit margin of 22.5%. Currently 100% of items on the site are drop-shipped, which means TRCC doesn’t keep any products it sells in stock. When TRCC sells a product, it automatically purchases the product from the manufacturer and the manufacturer ships out the product to the end customer.
EverythingButWine.com uses an inventory holding eCommerce method.
Monetization via Inventory Holding Ecommerce: EverythingButWine.com
If you want to run a full-time eCommerce business and you have money to invest in it, inventory-holding eCommerce might be a good option for you considering the hefty profit margin. However, you’ll generally need a larger initial investment to get setup. You’ll also need to think about where you will physically store your inventory, and what your fulfillment processes will be.
EverythingButWine.com (EBW) is an inventory-holding eCommerce website that sells wine accessories. With 3.9k unique visits and 34.8k page views, it generates $3.9k in revenue and $1.9k in net profit per month, with a high profit margin of 48.7%. Different from the dropship business TheRockingChairCompany.com (TRCC), EverythingButWine.com would stock products based on what customer ordered and manage the shipment in-house. EBW’s profit margin is 48.7%, more than double the dropship business TRCC’s 22.5% profit margin. Even though the monthly gross revenue of EBW is only $3.9k, the company could retain $1.9k as profit, while TRCC has to give up 77.5% of their revenue to others. However, EBW is currently holding inventory items that cost $13.9k while TRCC is free from the cash flow constraint caused by holding inventory.
MyCoverDeisgner.com is monetized via online services.
Monetization via online services is one of the most common methods of monetization encountered on Flippa. In demand online services include copywriting, graphic design, web development, and online marketing. Hiring specialists from major freelancing communities such as UpWork is a typical growth strategy employed by these web businesses, but it tends to squeeze the margins. On the flip side, though it is less passive and more time intensive, someone who already has the skills necessary to successfully perform a service that people are willing to pay for can widen the margins by performing the service themselves. In the end, service based online businesses can be quite lucrative, but it takes the right mix of skills and human capital to make them successful.
MyCoverDesigner.com is an eBook and print cover design website which offers professional book cover design services. The seller of the site claims to have a high proportion of repeat buyers, and they attribute this to the fact that the authors they work with generally write multiple books and are frequently in need of cover design services. The website is currently generating an average of $223/month profit off of an average of 111 unique visitors/month and 860 page views/month.
PhoneDetectiveTech.com uses a Click Bank Affiliate monetization method.
Monetization via Click Bank Affiliate Program: PhoneDetectiveTech.com
Joining one of the various Clickbank affiliate programs is a good monetization option for websites that are able to attract niche-specific traffic and convert it into sales. There are, of course, an almost endless number of affiliate marketing strategies, but one of the most successful seems to revolve around creating niche sites that cater to the same audience as the products/services being offered by the affiliate program. For instance, if you have a blog all about online dating, you might monetize that site by joining an affiliate program that sells a book about online dating, and by placing ads on your site that direct users to a location where they can purchase that book.
PhoneDetectiveTech.com is a phone lookup tool showing the details behind the phone numbers. It’s a Click Bank affiliate website and the website database is maintained by the vendor. With 6,043 page views and 1,648 unique visits per month, it generates $232 automated income for the owner every month. By joining an affiliate program such as Click Bank Affiliate Program, the affiliates could earn commissions by promoting other company’s products. Through SEO and referral marketing efforts, the PhoneDetectiveTech.com is able to attract reasonable amount of daily traffic to the website and convert the traffic into sales. In this way, the website could automatically generate passive income for the owner from the affiliate program commissions.
Did we capture all of your favorite website monetization methods? Make sure to chime in with your thoughts below!